Cultivating the African American Market
The African American community is a large market, with the endless potential to grow your business. Learn how to cultivate and grow your business to reach this market. Additionally, this article provides a background on the market, and a step-by-step guide for expanding your business to the African American community.
Cultivating the African American Market by Bryce Sanders
If you want to go after this lucrative market, start by taking the steps outlined in this article.
Target marketing makes terrific sense when you are part of the market you are trying to cultivate. Suppose you learned about a market segment with $1.1 trillion in spending power in 2015. It’s on an upward trend to reach $1.4 trillion in 2019. If it were a country, it would be the world’s 16th largest economy. Best of all, you have access to that market.
That market is the African American community in the United States. It is young (median age 32), highly influential and represents about 13 percent of the U.S. population. From 2000-2009, its share of more than $75,000 per year-income households grew by 60 percent, faster than the rest of the population (1).
Ariel Investments has conducted several annual surveys of attitudes towards investing within the African American community. Schwab partnered with them for several years. Unlike the broader U.S. population, African Americans don’t have a tradition of stock market investing dating back generations. According to a survey conducted by nerdwallet.com (2013), about 81 percent of Americans overall don’t know the type of account to open in order to trade stocks online. An even more compelling statistic comes from The Economist in 2014: “80 percent of investors seek professional advice.”
African Americans want the same things all Americans desire; yet, they often want them with more intensity. The Ariel studies over previous years reveal interesting data. For example, while everyone wants the best education possible for their children, African Americans will forgo saving for their own retirement to focus on their children’s education. They often see retirement savings as providing for their parents’ retirement comfort today instead of their own retirement in later years. They often view leisurely retirement as a luxury.
For years, African Americans have considered real estate preferable to conventional investing. This changed in 2010, when 41 percent of them saw a greater opportunity in the stock market, as opposed to 30 percent in property. Figures for white investors were 55 percent versus 27 percent, respectively. (2)
How does the African American agent or advisor start to build his brand within his cultural community? To begin, he can:
- Join local community organizations. There, he will meet influential people and enhance his visibility.
- Network in business and professional groups. When attending events, one African American advisor asks his friends: “Is there anyone here you think I should meet?” They get the hint and make introductions to him.
- Build credibility by giving back. The Nielsen Organization reports that 40 percent of African Americans expect the brands they buy to support social causes.
- Educate by seeking speaking opportunities. Find opportunities with local organizations to speak or hold your own seminars. Allow people to get comfortable with you.
- Cultivate accountants, pastors and lawyers. These individuals often know people who might need help. Become one of their potential providers.
- Become an expert. Assuming your firm is in agreement, write a column for your community newspaper. Reporters need experts to explain complex concepts in layman’s terms. Being photographed at charity events is an added bonus, as well.
- Explain how you help people. Advisors sometimes come with baggage—they aren’t always portrayed positively on television, for instance. To address this issue, share anonymous stories of how you’ve solved common problems of some of your clients.
- Don’t reinvent the wheel. Remember that others have gone before you. Ask within your firm about who has been successful in other parts of the country and seek their advice.
- Focus on retirement and education. This is a hot topic right now.
- Surpass expectations. Service providers often under-deliver. To succeed in this market, you must be better than your clients expect. Some final advice: Few new advisors succeed by limiting themselves to one market. Build success first by helping people of all ages and from different backgrounds. Once your practice is established, you can shift most of your focus to your cultural group.
Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, Captivating the Wealthy Investor, is available on Amazon.com.
This article appeared in Advisor Today.
Topics: Diverse Markets